SINGAPORE, Aug 16: Asian nations grappling with recession are unlikely to put a high priority on regional free trade, despite calls to maintain or even advance the deadline of the Asean Free Trade Area (AFTA), analysts said."A lot of these governments are already in the position where they have to implement fairly unpopular economic restructuring policies which are seen to threaten jobs at least in the short term," Political and Economic Risk Consultancy (PERC) Bruce Galein told Reuters on Saturday.
"Anything else like reducing tariffs in AFTA which might be seen in the same light, I think, would be avoided by most politicians in the region if they possibly could," he said.
Gale said that with the financial sector and distressed assets the more pressing issues right now, governments were unlikely to spend time looking at reducing tariffs.
The Association of Southeast Nations (Asean) groups Brunei, Indonesia, laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Under AFTA, sixAsean countries have agreed to reduce tariffs to between zero and five per cent by 2003, and the other three by later deadlines.
Singapore prime minister Goh Chok Tong said earlier this month that the timetable for AFTA should be advanced to send a signal to international investors that Asean countries were determined to open their economies to trade and investment. He did not specify what the faster pace should be.
But Simon Tay, a Singapore political analyst and nominated member of parliament, voiced doubts about the readiness of other Asean members.
"Although the officials have been saying there is no hesitation, they say that all the countries are on board, I don't think it's going very well," he said.
"It's because of the economic crisis, and also because we're dealing with countries such as Vietnam, Laos and Myanmar, who have not traditionally been open," he said.
He said that rather than see openness as a way of getting economies back on their feet, these countries may use the crisis as areason to delay implementing free trade.
PERC's Gale said that it was easier for Singapore to urge the speeding up of AFTA as it did not have to face the same domestic consequences of economic restructuring as its neighbours, most of which have been affected worse by the regional economic crisis.
"It (Singapore) can make such a call because it can support that as an ideal without threatening itself politically in domestic terms," Gale exhorted.
Singapore also had a bigger stake in seeing AFTA implemented, as it is more dependent on intra-Asean commerce and would benefit more from the boost to regional trade, said Daniel Lian, head of Asian markets research at ANZ Investment Bank.
"Any further decline in intra-Asean trade is going to affect Singapore relatively the most," Lian said.
"For countries like Indonesia and Thailand, their biggest hope is export recovery, to the western countries, they're not counting on exporting to Asean neighbours to survive," he said.
But Lian said he did not see aderailment of AFTA as there was still some time to go before the 2003 deadline.
Tay said that a possible solution to prompt reluctant nations to move in the direction of free trade would be an increased transfer of assistance and knowledge.
"A call to speed up AFTA cannot go in a vacuum, it must go with certain forms of reassurances and technical assistance," he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.